Store giants 'seek growth abroad'

Domestic markets are becoming increasingly competitive

International expansion is becoming increasingly important to retailers as they face fierce competition in their home markets, a report has said.

Tesco, number six in Deloitte's latest Global Powers of Retailing list, saw a 30% growth rate abroad, compared to 7% at home in the UK in 2003.

And the international division of Wal-Mart, the world's largest retailer by sales, saw turnover increase 17%.

The expanding Chinese market was also found to be drawing many store groups.

Growth areas

Foreign companies face fewer restrictions in mainland China and Deloitte expects this will be a "priority market" for the retail giants in 2005.

Among the top 250 retailers by sales, 31 non-Chinese firms - including Wal-Mart, France's Carrefour, and Germany's Metro - already have interests in the country.

Top Global Retailers Wal-Mart: US Carrefour: France Home Depot: US Metro: Germany Kroger: US Tesco: UK Target: US Ahold: Netherlands Costco: US Aldi Einkauf: Germany Source: Deloitte

And two Chinese retailers have joined the latest listing - Shanghai Friendship, the parent company of China's largest supermarket operator Lianhau is at 164, while Beijing Gome Home Appliance is at number 230.

Asia and Central and Eastern Europe will prove the main growth areas for retailers, Deloitte notes.

Mergers ahead?

The report found the strength of the US economy means many domestic retailers are able to grow without expanding beyond the country's borders.

US retailers represent 41.6% of all retailers in the list and make up half of the top 10.

Top UK Retailers Tesco Sainsbury Morrisons Kingfisher Marks & Spencer Dixons GUS Somerfield Boots John Lewis Source: Deloitte

Food retailing interests continue to be dominant among large global retailers, with nine out of the top 10 having operations in the sector.

Annual sales of the top 250 retailers totalled $2.6 trillion in 2003 - accounting for about a third of the total global marketplace, Deloitte found.

In the UK, Deloitte is predicting a new wave of merger and acquisition activity among retailers in 2005 with the focus on the non-food sector.

"Competition has intensified and no-one - no matter how successful - should dare to stand still," said Richard Lloyd-Owen, head of consumer business practice at Deloitte.